To prepare for a new wave of Customer Relationship Management software, it’s important for IT managers to learn from the multiple mistakes and pitfalls of CRM’s early years.

When I wrote The CRM Handbook:A Business Guide to CRM in 2002, companies were spending tens of millions of dollars on CRM software, but industry analysts were predicting that 80 percent of CRM projects would fail.

The mistakes and pitfalls of CRM’s early days are now legendary. Companies rushed to embrace CRM technologies, only to discover that automation couldn’t fix broken business processes, absent strategies or bad data.

Consultants keen on helping beleaguered companies get back on track proselytized the importance of change management to CRM initiatives, but that didn’t stick. As executives continued to aim their silver-bullet technologies toward the customer experience, they remained mired in incumbent business processes and traditional success metrics.

Everyone wanted to participate in vendor evaluation, but no one wanted to own the streamlining of order-to-cash processes or new measurements for customer satisfaction. Despite millions of dollars spent on CRM technologies, it really was business as usual.

Most executives now admit that they were ill-equipped to launch their CRM efforts. Hopes for automating customer-facing business processes and achieving the celebrated “single view of the customer” were dashed as sales, marketing and customer service executives came to terms with the fact that CRM was more than just a technology solution.

New Best Practices

Today, however, new corporate strategies are resuscitating the need for deliberate and sustained customer management. Is your company ready for the next wave of CRM?

Smart executives are heeding the lessons of firms that have gone before them. They’re aligning CRM efforts to corporate strategies and forgoing technology investments until their road maps are in place. They’re forging partnerships with consulting firms that have structured delivery approaches. They’re being deliberate about incremental deployment, and are keeping the customer top-of-mind every step of the way.

Grange Insurance, based in Columbus, Ohio, is one of these forward-thinking companies. “We were lucky that we had an executive team willing to invest in the customer experience,” says Mike Buzek, the vice president of EODB (ease of doing business), “but we knew we couldn’t sit around building vision statements and conducting focus groups. We had to craft solid requirements, identify the key stakeholders and define how we were going to execute. And we could never lose sight of what is best for our agents and policyholders.”

Buzek and his team are a reflection of the new best practices in customer management. Here are five habits followed by savvy business owners of customer-focused programs:

1. Don’t call it “CRM.” The term is fraught with baggage. Customer initiatives are now business-owned and branded. Wander the halls of any large company’s sales or marketing organization and you’ll hear “customer experience management” (CEM) or “voice of the customer” mentioned long before hearing the CRM acronym.

2. Remember your business model. CRM at a telephone company that wants to understand the calling behaviors within micro-segments to bundle products and services will look very different from CRM at a health care provider that wants to migrate to an end-consumer model, which will look different again from CRM at a retailer with a loyalty card. Understand the boundaries of CRM for both your company and your industry. When in doubt, map out desired outcomes.

3. Keep social media in perspective. Many customer-management experts are betting on so-called “social CRM” to resuscitate moribund CRM efforts. But where the customer experience is concerned, your company’s Facebook fan page and Twitter account are merely two additional communications channels. Your brand and your dialog with customers transcend social media.

Recently, a manager at a bank confided, “We’re putting all this effort into social media to get closer to our customers. But we still can’t see the total set of products and services a customer has on a single screen, never mind whether [he or she is] profitable or not.” Social media goals should be a part of a rich set of customer-focused capabilities.

4. Consider the cloud. That “customer’s next likely purchase” pop-up doesn’t just magically appear on the call-center rep’s screen. It’s the product of some rigorous integration and heavy-duty back-office analysis. When it comes to CRM functionality, even small and medium-size companies often have sophisticated processing and storage needs. Don’t let your existing technology infrastructure—or lack thereof—be an excuse not to launch new CRM efforts. There are plenty of CRM solutions in the cloud that support pay-as-you-go models, while forgoing significant infrastructure and setup costs.

5. Don’t forget about the data. That “single version of the truth” promised by so many CRM vendors has ceded to the reality that many of yesterday’s CRM tools have become today’s legacy systems. New customer-focused strategies mandate that the huge volumes of data being generated are accurate, meaningful and reconciled across disparate silos. Indeed, a single version of truth about a customer is as much a product of formal data governance processes as it is about a centralized technology platform.